Consumer prices for May were down, but they had been up for the past 12 months, according to the Bureau of Labor Statistics. The consumer price index for all urban consumers (CPI-U) dropped 0.2 percent in May on a seasonally adjusted basis, but over the last 12 months the index increased 2 percent before seasonal adjustment.
For the second month in a row, declines in energy prices were the main driver in the CPI-U's drop. The Bureau reported that its index for energy decreased 2.9 percent in May, offsetting a slight increase in the index for all items less food and energy. Gasoline decreases accounted for most of the drop, although all the major energy indexes declined.
Given unemployment at close to 10 percent, the economy can't sustain much in the way of inflation, but experts noted that an inflation less recovery means the economy will not expand at a very inspiring rate.
In any case, the Fed will most likely wait until 2012 before it raises interest rates, the Federal Reserve Bank of San Francisco reported in an "Economic Letter" it released last Monday.
The producer price index for finished goods dropped by 0.3 percent in May (seasonally adjusted), the Bureau of Labor Statistics reported last week. This decline followed a 0.1 percent drop for April and a 0.7 percent increase in March.
Meanwhile, permits for privately owned homes dipped to a seasonally adjusted annual rate of 574,000, which was 5.9 percent below April's revised rate of 610,000, the Census Bureau reported last week. Permits for single-family homes in May were at a rate of 438,000, a whopping 9.9 percent below April's revised figure of 486,000.
Starts on construction of private housing units in May dropped to a seasonally adjusted annual rate of 593,000, which was 10 percent below the revised April estimate of 659,000. Starts on single-family homes in May were at a rate of 468,000, 17.2 percent below April's revised rate of 565,000 units.
This week, watch for news reports covering existing home sales (June 22) from the National Association of REALTORS® new home sales (June 23) and orders of durable goods (June 24) from the Census Bureau; consumer sentiment (June 25) from the University of Michigan; and the gross domestic product (June 25) from the Bureau of Economic Analysis.
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